Africa’s internet economy needs more data servers on the continent

The internet is a good thing for Africa. But it could be an even better thing.

This is the subtext of an Internet Society report, out this month, titled Promoting the African Internet Economy.

The economic case for the internet in Africa is unsurprisingly strong, but the report points out that there’s still plenty of room for improvement. In developed countries, the internet contributes up to 3.7% of GDP on average, while in African countries it’s just 1.1%. The internet sector makes up 3% to 5% of the workforce in OECD countries, but in developing countries only 1%.

Internet Society says a focus on building the internet sector is critical for development, but will have an ultimately limited impact on the size of the economy. They argue, however, that improved efficiencies from an internet-enabled economy can be significant. Research by McKinsey estimates that the internet can deliver productivity gains in Africa in the education, healthcare, financial services, agriculture, retail and government sectors, valued between $148 billion to $318 billion by 2025.

For African governments, many of which are still pen and paper pushers in their day-to-day interactions with citizens, there could be cost savings of 60% to 75% just on administrative tasks. Mauritius, Tunisia and South Africa are already leading the way on this (pdf).

And as much as progress is being made, just 22% of individuals are online in Africa, according to ITU. Adoption is uneven across the continent, with countries like Eritrea and Somalia lagging in the low single digits, while others like Morocco and South Africa are comfortably above 50%.

The lack of local content infrastructure in African countries, such as data centers, routers, servers and content delivery networks (CDNs) is one of the key challenges Internet Society identifies as being needed to drive wider and deeper internet usage. “Hosting content locally significantly reduced the latency and cost of content delivery, in turn making it more accessible for the local community.“

It’s one thing for a local blogger to create original content that people want to see, but it’s quite another for the content to get served up to someone in the same country in a rapid and seamless fashion. That often doesn’t happen because when information travels, it’s routed halfway across the world through internet exchanges in Europe or North America before being delivered to back home to readers. There are some local service providers in Nairobi, like Kooba and Angani, but it’s still early days for those hoping to do it at meaningful scale.

This means that internet delivery is slower and more unreliable than elsewhere and also more expensive, which is discouraging. Fixing this problem would a be a big step in the right direction. As Internet Society says, “Ultimately, it is clear that local content infrastructure must be developed in order to support a robust Internet economy across Africa.”

Internet Society suggests countries should have policy which focuses on “deepening the internet sector”. This is to ensure all users and organizations can go online, with good quality access that is affordable and supported by online skills training.